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Thomas Jefferson University has agreed to pay $2.7 million to resolve allegations that it misused federal funds intended for student loans, the Justice Department said.
The settlement follows an investigation by the Office of the Inspector General of the U.S. Department of Health and Human Services and the U.S. Attorney's Office for the Eastern District of Pennsylvania involving Jefferson's use of monetary awards from the federal Primary Care Loan Fund, which is meant to boost the number of primary care physicians in the workforce.
The U.S. Attorney's Office alleges Thomas Jefferson University invested money from the PCL Fund into its own endowment rather than use it to award loans to medical students willing to commit to practicing in primary care for 10 years, as is required by the program. Jefferson allegedly put "nearly all" of its money from the fund into the university endowment between 2009 and 2016 and retained all of the returns from that investment.
Thomas Jefferson said in a statement to the Business Journal that it "expressly denies the allegations made by the government and admits no liability." The university said it settled "to bring the 15-year-old legacy matter to a close." It added that forensic accountants and certified public accountants opined that the university's handling of the funds aligned with generally accepted accounting principles.
"To be clear, records maintained by Thomas Jefferson University reflect that PCL funds were managed in accordance with its understanding of standard accounting procedures, as well as any existing guidance," the university said in its statement.
The university returned $5.6 million in excess funds from the PCL Fund to the Human Services’ Health Resources and Services Administration in 2017, according to the U.S. Attorney's office. The settlement announced Tuesday resolves claims on the earnings Jefferson is alleged to have gained from investing the federal funding.
In addition to allegedly violating terms that the loan be used explicitly for students and program-related expenses, loan terms also stipulate that any excess funds not needed for student loans be returned annually to the U.S. Department of Health and Human Services' Health Resources and Services Administration and that any excess cash be kept in federally insured accounts, according to the U.S. Attorney's Office.
“When a medical school wrongfully retains Primary Care Loan program funds that exceed its lending needs, it doesn’t just deprive students at other participating schools the opportunity to use that money to finance their educations," U.S. Attorney Jacqueline C. Romero said in a statement. "It deprives our communities of the very resource the program was implemented by Congress to provide — primary care physicians to keep them healthy and strong."
Last week, Dr. Mark Tykocinski resigned as president of Thomas Jefferson University. Dr. Susan Aldridge is serving as interim president.
